Clouds in L.A.: Microsoft Loses Los Angeles Contract to Google

It's easy to take the Los Angeles City Council's October decision to use Google e-mail over Microsoft as more than what it is. The council chose Google Inc.'s cloud platform, including Gmail, over Microsoft Exchange and Microsoft Outlook. In the process, the city dumped an old Novell GroupWise installation.

Certainly, the nation's second-largest city choosing to spend $7.2 million on a cloud model for something as essential as e-mail is a watershed moment in the technology industry. But some observers have already exercised a bit of hyperbole in analyzing the matter.

"This is a story of two very large companies going head to head in a battle for the future of the heart and soul of the technology world," David B. Yoffie, a dean and professor of business strategy at the Harvard Business School, told the Los Angeles Times. "If Google wins, the way that we look at our day-to-day computing will be 100 percent focused on the cloud."

Not so fast, professor. Client-server e-mail systems -- such as Exchange and Outlook, GroupWise or Lotus Notes -- are still the standard in most companies worldwide. While cloud computing is building momentum, it's unlikely that L.A.'s decision to spurn Microsoft will kill off desktop software.

However, Microsoft might want to re-think its marketing message the next time it comes upon a cloud-based competitor. In trying to discredit Google's Gmail, Microsoft officials might have done too much to bash the notion of cloud computing altogether -- and that's bad news for a company that wants and needs to break into the cloud business.

The following was noted in the same Times article: "Microsoft executive Ron Markezich contended that Google's cloud model was still something of an experiment for business customers ... 'My genuine concern is using a service built for consumers as a complex, public sector service,' he said."

Markezich focused his comments on Gmail, but they raise concern -- possibly intentionally -- about the security and reliability of the cloud model itself. And while Markezich makes a valid point about the cloud's relative infancy as a business-computing platform, it might be in Microsoft's interest to tone the anti-cloud message down just a bit.

After all, Microsoft itself is making a big push into the cloud with the Azure platform and a forthcoming hosted offering, Office Web Apps, among other products.

Microsoft might find selling the cloud to businesses difficult in the next couple of years if its own officials are on the record talking about how unsecure and unreliable the cloud is. And businesses, municipalities and universities are likely to show growing interest in cloud-based applications as a wavering economy keeps budgets tight.

In Hollywood parlance, Microsoft might need to tweak its script a little bit -- it has, after all, already lost a part in the entertainment capital of the world. Granted, Exchange -- which, incidentally, is available as a hosted platform -- is still the biggest star in the e-mail business, but, as folks in L.A. know, fame and fortune can be fleeting things.